Advancing the transformation – new tools for new challenges Introduction • How many of you entered this industry in the 20th century - as I did – when Atlantic LNG initiated operations? • It was a very different world. • Look at how Trinidad & Tobago has changed since then. o The economy here is three times the size it was in 1999. o Gas production has tripled - from 1.1bcfd to 3.3bcfd. • World in general has changed profoundly, particularly with digital technology. o In 1999, 4% of the world’s population used the internet. Today it is over 55%. • Terms like cloud, data lake, cognitive computing, blockchain, were not in the oil and gas industry’s vocabulary. • Leaders who grew up in a largely analog world now have the responsibility of leading the industry in a digital era. • Our task is to make our industry fit for a very different future. • Over the next few minutes, I will offer some thoughts about the change we have to embrace. o changing context – the new challenges we face; o changing tools – that we now have at our disposal; o change in culture and mindset – that we need. Changing context • One thing is not changing – growing demand for energy. • Global energy use has grown by around 50% since 1999. • That has helped to halve the number of people living in extreme poverty. • We now expect demand to grow by around a third by 2040. That’s according to BP’s Energy Outlook. • Another big change - in the last 20 years, annual carbon dioxide emissions from energy have risen by more than 40%. • The Intergovernmental Panel on Climate Change says emissions need to fall by 45% on 2010 levels by 2030 to keep the temperature rise to 1.5 degrees on pre-industrial times. • So, our industry’s task has changed. Not only to meet growing demand but to meet the dual challenge of providing more energy with fewer emissions. o There are several ways to achieve this. o Using more renewable energy will help. o So will using energy more efficiently. o Using gas in place of coal, because gas has only half the emissions of coal when burned to produce electricity. o Trinidad & Tobago has an important role in helping to provide this gas. o Meeting the dual challenge doesn’t mean an overnight switch and a race to renewables; rather a transition to lower carbon sources of energy where gas continues to complement renewables. o If we meet the 1.5-degree goal, we estimate the world will still get around 40% of its energy from oil and gas in 2040. • Another big change in the context. 20 years ago, the world was worrying about oil and gas running out. o Yet look what happened. Since 1999 we’ve used roughly 600 billion barrels of oil - but reserves have actually risen by around 400 billion. Gas reserves have increased by around 40% too. o BP’s Technology Outlook estimates that the world has something like five trillion barrels of technically recoverable oil and gas in total. o We have moved from a fear of scarcity to the reality of abundance. o With abundant supplies, only the most competitive resources will reach the market. o A particular challenge you are familiar with here, as Trinidad & Tobago faces new competition from the US and other gas exporters. • Challenges demand a transformation in our industry. Safety must remain our top priority, but it is followed by environmental responsibility, efficiency, cost and value. These have become the new vectors of transformation for our sector. • Efficiency has historically varied with the oil price. At BP, we are determined to decouple performance from price. Our goal is sustainable, consistent efficiency improvement. • To do this, we have embarked on a transformation programme. o We put safety first – it a core value. o We have a commitment to capital discipline. o We seek out the most advantaged oil and gas resources. o We strive for quality execution. o And we aspire to be the agile, digital company that talented people want to work for. Changing tools • Fortunately, we have changing tools to help us meet these challenges. • Now playing their part in what some have called the fourth industrial revolution. The first three were driven by steam, electricity and automation. o The fourth revolution is about connecting the other three, linking physical and digital technologies. • In BP, we are transforming our business in exactly this way – connecting the physical power of platforms and pipes to the digital power of big data and artificial intelligence. • These new tools can help with age-old challenges as well as newer ones. • Look at safety. We can now use remotely operated devices such as drones or submarines to undertake critical inspections. o For example, when our team at the Mad Dog platform in the Gulf of Mexico used a mini ROV to inspect its spar platform ballast tanks, it avoided a confined space entry, improved the capture of data, and averted a $15 million production deferral. • New technologies are also helping us take on the environmental challenge, for example using infrared cameras to detect and reduce methane emissions in gas production. • Reliability is enhanced by new digital technologies such as our Plant Operations Advisor system that monitors more than 1,200 mission-critical pieces of equipment, analyzing over 150 million data points per day. • We have used advanced digital tools for many years in part of our business. 3D seismic, one of the earliest incarnations of big data in our industry, was pioneered by BP and others in the 1990s. • Today seismic has entered a new era. o More powerful computers than ever before. BP’s Center for High Performance Computing – CHPC - has more than quadrupled its power to around eleven petaflops since opening in 2013. That is 11 million billion calculations per second. It would take a person roughly 350 million years to do what the computer does in a second. o Capacity of supercomputers is now being turbocharged by the power of artificial intelligence. o A Full Waveform Inversion algorithm created by a young BP scientist helped us recently discover a field within a field in the Gulf of Mexico. o It took just a fortnight to process the algorithm. With the technology of 1999, it would have taken 1,000 years. • An integral aspect of our digital transformation is what we call The Connected Upstream. o Connecting people and data; o Connecting physical and digital assets; o And connecting machine intelligence and business decisions. • A good example of connecting people and data is a system called ARGUS. o ARGUS is a database of our wells, with a modern visualization and analytics engine. o It sits in the upstream Data lake which receives more than a billion data points a day . o BP engineers anywhere in the world can access their wells’ data instantly. o Well review meetings used to require engineers to spend hours pulling together data and analysis. Today they simply open their laptops and are ready to go. • An example of connecting physical and digital assets is our production optimization system, APEX. o It is a digital twin of our production systems around the world. o Our engineers use it to simulate production operations and optimize them. o It was scaled up from a pilot to around 30 operations within a year. o We estimate it has added more than 30,000 thousand barrels to our production in one year. o Here in Trinidad & Tobago, one of the early adopter of APEX, a great example of its potential came with the start-up of two major projects TROC and Juniper, which introduced an operating vulnerability in the connecting pipeline network that did not previously exist. o During a partial system shut-down, the vulnerability could lead to an integrity risk without an intervention - choking back production by 300 mmscf/d (50 mbd) for several days appeared to be the only course of action. o However, a 15 second system-wide simulation run using APEX demonstrated that the risk would have no lasting impact on pipeline health, resulting in a well informed decision to sustain current production levels • Third element in the Connected Upstream is connecting machine intelligence to business decisions. • Systems such as Return to Scene or R2S which Claire mentioned earlier. This was originally developed by the police to create detailed images of crime scenes. o We use it here and around the world to generate high resolution images of facilities that enable us to plan maintenance onshore and cut the time needed on-site. . We have around 130,000 such images . o In Trinidad, we can walk down four of our facilities-Cashima, Amherstia, Juniper and Mango. • Partnering with specialist AI businesses o Working with a NASA spin-out, Beyond Limits, we are building cognitive agents. A cognitive agent emulates a human expert’s cognitive processes using data, physics-based models and experience-based principles It augments human expertise, rapidly providing our engineers with options, to address issues like sand influx in a well. o Last week, we announced an investment in another Artificial Intelligence startup, Belmont Technologies, that will speed up the interpretation and integration of subsurface data. The AI, nicknamed 'Sandy', can map out scenarios and perform rapid simulations. The technology is targeting a 90% time reduction in data collection, interpretation and simulation, from exploration through to reservoir modelling. • Globally, we estimate a 30% improvement potential in operating cost from Digital technologies. • Alongside our growing investments in digital, we continue to invest in technologies such as enhanced oil recovery and advanced materials, where we see strong potential for efficiency and value gains. Changing culture • This transformation does not only depend on technology. It is equally important to change our culture and mindset. • Can we adjust to different types of work? o This is a challenge we cannot escape. o Machines can now do mechanical tasks that engineers once did. o This is an opportunity not a threat. o A recent report by McKinsey showed how new technologies actually add jobs. Indeed, it estimated that personal computing has created 16 million jobs in the US since 1980. o BUT, as individuals, we have to enable ourselves to move to a higher level of problem-solving, harnessing new technologies as they arrive.. • For the, we need a fresh approach to learning. o We will not transform this industry by simply hiring digital experts. If you read that somewhere – throw out that book! o Rather we have to re-skill and rightly equip our existing talent. o At BP, we have opened up online self-help programs in topics like data science, machine learning and coding, for all our employees. o We are practicing reverse mentoring so that digitally-savvy recruits can share their skills with senior leaders. A local IT staffer here was mentor to a senior Upstream leader from the UK. o A few of our digital heroes from Trinidad: Larry Ghany who leads R2S in Trinidad. Digital has changed his career and enhanced his work life balance as he no longer needs to make as many site visits for routine work. Anna Gobin used the Office 365 toolkit to develop an app for site visits to be recorded – instead of waiting for manual input - increasing efficiency and accuracy. Shaun Hosein who has been using the ‘Scrum’ methodology to rapidly form bespoke teams for different projects – combining people power and technology strength to cut cycle times in well planning. Conclusion • The future is uncertain but preparation for it must not be so. • The dual challenge is real and our industry is firmly in transition. • The pace of technological change is extraordinary and is becoming faster each day. • In fact, today is the slowest day of technology change for the rest of your life. • The world is entering an era of hyper-connectivity, which will offer possibilities we are just beginning to imagine. • Our job is to build an oil and gas industry that is fit for this new future. • At BP, we are investing to maximize the potential of both human and digital systems – humans with our unique cognitive power; machines with their unparalleled processing speed. • It is a great responsibility. And a great opportunity. • Thank you!